How to make 7 million in 7 years …

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Millionaires aren’t rich!

I was snooping around Watson Inc’s blog … you know, just stopping by for a friendly chat (whilst really checking out the competition) and, thought that I should just add my 2,000,000,000 cents worth to his surprising ‘facts’ about millionaires [my quotation marks]:

– I didn’t inherit my money – I might, but one of the reasons that I’m self-made ‘rich’ is because I always expected (still expect) this little family nest-egg to be squandered well before it hits me.

– I don’t feel rich – I did for about one nano-second after receiving my second big payout, but the current financial crisis hit pretty soon thereafter, and reality set in.

– I don’t have a high-paying job – in fact, the only time I was paid more than $60,000 a year was about 8 years BEFORE I started my $7 million 7 year journey, and again AFTER, when I formed my US joint venture and realized somebody else was actually picking up 49% of my ‘tab’.

– I drive fancy cars – D’uh yeah! What’s the point of being rich if you don’t get the vroom and the bling?!

– I don’t hang around the golf course all day – I struggle to find time to: play golf; spend more than 1/2 to 1 mid-week day with my wife; a 1/2 day playing poker (yes, it’s true that I’m a degenerate); and, so on. I’m too busy with my blogs and projects … and, travel!

– I am not an elitist – if I was, would I be ‘talking’ to you? 😛

…. most importantly, I am definitely NOT a millionaire.

Millionaires can’t afford to do/be any of the things that Shawn suggests … I think he’s actually referring to us multi-millionaires 😉

By the way, I encourage you to pop over and read the comments on this particular post; Shawn and I had a very interesting discussion about the practical nature of wealth … check it out here.

The point about being “rich” is that it gives you options – to live comfortably, to spend it, to retire to do whatever rocks your boat.

In any case, a million dollars does not go that far in most developed countries. Even 2-3 million is not going to support a family with private education costs, a decent home, a holdiay home and a desire to travel etc. However, it is more than enough to be derided ad the undeserving idle rich who should pay “more” taxes because it is “fair”.

The link was interesting. The thing that continually stands out to me is just how misguided, illogical and plain wrong the comments on the effective tax rate for dividends and capital gains are. Perhaps a topic for another day.

Thanks. As you say, Australia has such a system in place: if you buy dividend that have been “fully franked” they are effectively tax free to you (as the company has already paid their fair share of tax … as you point out).

I drive a 1998 tin can of a car. My wife drives a 2004 car that she bought new for $12,000. Part of the reason we are ‘wealthy’ is because we spend very little of what we make. For us, spending lots of money isn’t enjoyable, it just feels dirty. Plus, we have over 35 years until official retirement age – why waste money now?

The last thing I want is to pass down a lot of money to my kids, or at least for them to know that we have money that they might inherit. The surest way to create a good-for-nothing kid is to raise them to expect the high life. There’s a reason why most millionaires are first generation, and why the vast majority of millionaire children do not become millionaire adults.

BTW – as you can tell, we are ridiculously frugal. We make over $300K per year, yet spend ~$35K per year even with kids (we’re debt free, which keeps our costs low). Assuming inflation stays at 3%, we could retire today, in our early 30s. It’s comforting to know that we work because we want to, not because we need to support a lavish lifestyle.